Some gains noted but outlook still mixed in May

26 July 2010

A slight drop in the BDI mid-May, led by the Capesize market which was unable to maintain the pace of the previous week. However Panamax-to-Handysize showed gains over the week on the back of continued tonnage tightness. In the newbuilding market, there were surprise reports of orders for both Rio Tinto and BHP Billiton. Rio Tinto was said to have placed a US$500m order at Hanjin for eight 205,000dwt vessels. Meanwhile BHP is reportedly set to give 10-year charter backing to six vessels of the same size to be ordered by Fortis bank at Hyundai (at a cost of US$66-US$67m each).

PanamaxOverall the Panamax 4 TC average gained almost US$2,000 and closed the week at around US$37,000/day. In the Atlantic, the market was busy, mainly due to the lack of ships available for early June dates for loading in the ECSA/USG/USEC areas. As a result, the Transatlantic round went up by US$5000 to finish the week at US$44,000 per day. In the Pacific we saw a downward trend with a good number of vessels open in China/Southeast Asia pushing the market down. With a much quieter Indian market, the PARV lost US$1000 over the week to finish at US$32,500/day. However some ballasters open WCI were still getting US$34-35,000/ day to trade ECSA grain cargo with Far East redelivery.

Supramax/HandyThe Baltic Supramax Index went up by 19 points to finish at 3095 points mid-May, while the average of the time charter routes gained about US$200 to finish at US$32,360 per day. The market was active in the Atlantic. A Supramax round via NCSA was fixed at US$30,000 and TCT from the USG to Skaw/ Passero was worth US$55,000 on APS delivery. Grain and sugar are still pushing hard in ECSA. However, ballasters coming from the Pacific/Indian Ocean helped soften the rates for the vessels able to make dates in first half June in South America. The market was short on Supramax vessels for prompt dates, however, and trip from ECSA to the Continent was worth close to US$30,000 daily, while trip out was effectively fixed in the very high US$30,000s delivery WAF region. In the Far East, the Pacific market was slowing down with a lot of vessels looking for employment, with most of the Indian iron ore loaders affected by the monsoon. On the smaller sizes, the Baltic Handysize index went up by 35 points to finish at 1,516 points, and the time charter routes gained US$441 to reach US$21,965 daily. The Atlantic is much firmer than the Pacific and the TARV is worth US$25,000/day, whereas the Pacific round voyage is worth US$18,000 daily.

On the period front, brokers saw interest for both middle period (2/3 years) and short period. Recently-built Tess 52 types were getting fixed for 3/5 months trading, delivery Far East, in the very high US$20,000s with worldwide redelivery.